Corporate strategy
Expansion strategy
McDonald’s has adopted a Market Development strategy for expanding into growing economies, especially those of Asian countries. The Golden Arches have set their sights on penetrating Asian markets, as those markets have high income potential. McDonald's already enjoys unqualified success in Tokyo, Seoul, Beijing, India, and the United Arab Emirates, to name a few Asian markets. There are many other markets throughout the Asian region that offer the promise of high sales, market share and profit for the creative fast food company that is fast enough on its feet to set up operations there.
Franchising
To carry on the expansion strategy the company used the franchising strategy worldwide. It has successfully replicated its business model, not in the US but also in the global locations. Today more than 80% of the restaurants of the company are operated through the franchisees. The contribution of the franchisee business is as follows:
Adaptation strategy
Due to different rules and regulation in foreign countries, the company sometimes cannot follow standard practices everywhere. For instance, meat is purchased in a specific way in Russia due to local regulations. Adaptation in the standardized process is done to meet legal and cultural demands. There used to be a McCenter in Russia for purchasing all the raw materials that go into McDonald's meals, but now meat, potatoes, buns, vegetables, milk, soft drinks, etc., are purchased from wholesalers. It is now more of a challenge for the fast food giant to maintain uniformity of quality and cost for its outlets in Russia. This affects everything from quality to profit, and from market share to food cost.
Business Strategy
Value for Money
McDonald’s aims to lure price sensitive customers with its value for money meals such as the Buffalo Ranch McChicken and the Jalapeño McDouble (Lutz, 2014). The company initially targeted high-priced value items in its menu but has recently shifted its focus towards lower-priced products
Customer Service
McDonald’s has always focused on its service excellence to provide customers with high-quality food served quickly and in clean surroundings. However, with increasing demand and a complex food menu, the restaurant has been experiencing service delays due to the longer preparation time required for menu items (Lutz, 2014). Speed of service is one of the most crucial aspects of fast food. During peak traffic times (lunch and dinner rush times), customers expect to receive their orders within about one minute after placing them. During slower times, customers are willing to wait two or three minutes for their orders before they start to form negative opinions about the company. McDonald's has realized that a return to its former reputation for serving quality fast food quickly means elimination of certain menu items and greater focus on its more traditional menu items, such as Big Macs, Quarter Pounders, Fish, Chicken, and French Fries.
Brand Marketing
McDonald’s has been adversely affected by the growing health concerns of consumers all over the world. The products of McDonald’s have been labeled as junk food and declared unfit for daily consumption. McDonald’s now aims to increase the trust of its customers in the food quality and brand of McDonald’s products as healthy food options (Lutz, 2014). To do this, it has started offering salads, iced tea, sugar free drink options, fruit juices, and other options that are either low in calories and/or low in carbohydrates.
Menu Standardization
McDonald’s has implemented menu customization for various countries of operations that has actually complicated the menu items and increased the preparation time and thus wait time for customers (Lutz, 2014). McDonald’s needs to standardize and simplify its menu items to include food items that can be prepared quickly and served in the shortest possible time. Again, McDonald's is focusing on its traditional menu of Big Macs, Quarter Pounders, McFish, McChicken, French Fries, sugar-free drink options, juices, and breakfasts.
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Digital Marketing
McDonald’s has shifted its focus on digital marketing strategy so as to engage and target the young online audience through social media networks such as Facebook and Twitter. The company hired its first digital marketing officer Atif Rafiq in the year 2013 (Morrison, 2014). Digital marketing is paying off, as results show that more young people are visiting McDonald's than before. The drop-off in sales and market shares is among families; that is where McDonald's Corporation's challenge lies.
Breakfast Menu Items
McDonald’s has recently launched new additions in its menu items and offers an expanded breakfast menu with coffee, milkshakes and pastries for customers (Moskowit, March 2014). The strategy is quite successful for the brand and the demand for breakfast menu items have increased substantially for the company. One possible solution that McDonald's might want to consider is to follow the lead of one of its smaller regional competitors, Jack-in-the-Box, which sells breakfast 24 hours per day. With the popularity of the Golden Arches' breakfasts, it might be a successful way to snag some additional market share and bolster sales and profits.
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